Camerra-Rowe, Pamela. (2003) "Political parties, economic policy-making, and European monetary union". In: UNSPECIFIED, Nashville, TN. (Unpublished)
In addition to its economic and symbolic significance, European Monetary Union (EMU) has important domestic political implications. This paper explores the impact of EMU on political parties, focusing in particular on the impact of EMU on the current German Social Democratic-led government. I argue that EMU prevents major political parties from capturing and maintaining the support of key constituent groups because it limits their ability to pursue redistributive policies. This has had three major effects. First, it leads to greater voter volatility as voters see little difference in the economic benefits which might be associated with one party or coalition of parties from coming into office than others. Second, EMU contributes to greater labor militancy as major parties of the left are unable to pursue economic policies that protect the income of workers and unionized labor. Finally, the shrunken policy space for economic policy leads parties to focus on single issues or personality in order to win elections, which ties voters less strongly to specific parties and, hence, further contributes to volatility in elections. While the specific consequences depend on a country's institutional arrangements and party environment, I argue that all major parties of the left and right face economic constraints as a result of the limitations imposed by EMU and will have greater difficulties capturing and maintaining the support of their traditional constituencies.
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